Net hot money inflow hits $3.885B

MANILA, Philippines - Foreign investors swamped the local financial markets last year, with the net inflow of foreign portfolio investments beating official forecasts, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Portfolio investments – also called “hot money” for the ease they enter and exit economies – posted a net inflow of $3.885 billion in 2012, well above the BSP’s revised $3.2-billion projection.

The total tally, however, was down 4.7 percent from a net inflow of $4.077 billion reached in 2011. A net inflow indicates more foreign investments entered the country than left.

For December alone, hot money recorded a net inflow of $212.65 million.

“(This) reflected… renewed interest in PSE-listed securities, coupled with sustained investor confidence in the country’s sound macroeconomic fundamentals,” the central bank said.

Hot money investments are usually placed in the bond and stock markets. The BSP has been watchful of portfolio investments as they can cause volatility in the stock and foreign exchange markets which could be detrimental to businesses.

For 2012, data showed gross inflows for the year reached a 10-year high of $18.456 billion, while gross outflows amounted to $14.571 billion.

Investments were mainly channeled to listed companies at the Philippine Stock Exchange (PSE), the central bank said. The benchmark PSE index, which closed up 0.41 percent to 6,072.18 yesterday, has reached seven record-highs this year.

By source, the United States, the United Kingdom, Singapore, Luxembourg and Hong Kong were main sources of inflows, the central bank noted. Top beneficiary sectors were not immediately available.